Forum Replies Created
are you factoring in rent received in these calculations or are you going to live in it as a PPOR. We live in a rented home as do most investors I know. What is the rental yield on the home you live in ie the rent you pay as a percentage of your estimate of the purchase price. Are you considering paying asking price for the property you would ultimately buy.
If stamp duty is your big concern then you will have to rule property in vic out i’m afraid – I can’t see the state government giving up those revenue dollars in a hurry.
The lmi problem would be solved over time as you obviously have the capacity to save the deposit. Leverage is going to be the big plus over time as mat has mentioned.
Hi,
This is a very common question but understanding the issues around it can become a turning point in the career of an investor.
I would like to touch on this point that you have made in your original post,
The potential problem is, I think we are in a buyers market, but a lot of vendors are holding onto the pre boom mentality and prices..
This is probably true but consider this quote by Robert Allen who is a pretty successful real estate guy.
Most neophyte investors become discouraged because they haven’t learned that 95% of sellers are not flexible. They need to be dealing with the 5 percent who are don’t wantersI had to look neophyte up – just means new.
Why is that important to understand. Well because you may misdirect your energy. Given that you have a limited amount of time to find deals trying to convince people that there price is unreasonable is inefficient.
Make your offer and walk away.
Right now is the time for you to cut your teeth in this game.
Investors can make money in real estate whether the maket is going up down or sideways (not sure who originally coined that phrase but I think there is a version of it in every book I have ever read on investing).
Steve is obviously still buying (0 to 260) and so are many other “investors”. In fact i would go as far as saying it is actually easier to make money now if you know what you are doing than it was two years ago.
I will be in OZ for a few weeks soon and I can’t wait to have a bit of a play again.
Off topic a bit but that happens when you start to type.
sounds like you are very busy wake!!
dr x – nice work can you put the pics on your own site and link back for us to have a look at. cheers
good luck mate!
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/cashflowproperties_wanganui.htm
Hi Andrew,
At the outset investing long distance is completely different to investing in your own back yard. Some people will tell you it is easy and there are no problems. Well that is just rubbish. It’s harder because you are not there to “know” things which puts pressure on how you do things and also on how you perceive things – this can be just as big a problem. ie if things are going great and you a stressed about it then long distance is not the way to go.
Culture is different – property management is a bit different but the same in many respects – rates are about 8.5% plus gst some cheaper some dearer and the level of service you get will be different all over the place – same in any country I imagine.
The market – well in some areas it is absolutely going off and in other areas it is dead and buried.
It is like oz – you can’t compare perth with sydney or in sydney you don’t compare cabramatta with bondi beach and double bay – or anywhere in the world you simply have to know where to buy – know the market and know the lay of the land. If you are buying now I would go fixed rates as they are heaps cheaper than the standard variable. The technicalities of doing business in NZ are pretty easy.
Gore and matarua are both very small places – I live near by to both and have never been tempted to buy there – but on the other hand know lots of people obviously do.
Banking is easy and probably the easiest banking you will find anywhere. You can open an account no problems and finance to ozzies at standard rates at 90 lvr is very much common place these days. Closing costs – legals 1000 to 1200 not much else. Loan establishment etc. Whatever they are. Maintenance will be more expensive because you are not there – fact of life.
There is another good forum http://www.propertytalk.co.nz. Use the search function on there and you will find out more than I could ever tell you in one post – what’s hot – what’s not.
Taxes – get a good accoutant early on. Depreciation here is fantastic at massive rates even on old dwellings – ie you can write of cost of dwelling starting new from the day you get it. Runs along the same basic lines. As an individual – the ATO wants a share of your worldwide income. No capital gains tax BUT (and many people forget this or just hope and pray) if you are in the business of buying and selling you SHOULd pay tax accordingly. If you buy with the intention to buy and hold and sell later then as long as that is the genuine intention at the time you are okay BUT get this part done first.
If it was me and I was starting now I would
* read as much as I can
* pick a few target areas and do a few trips for research
* before the trip find a good accountant and lawyer and drop in to see them – rugby is the only sport people are interested in here
* Also meet your broker
* these local people will tell you alot about the lie of the land and there fees will be worth there weight in gold.There are books around but why not just get on a plane and meet some people and check the place out. Good on you for reaching three properties already. You are in the top 2% of all property investors (or is it 5%). That figure still blows my mind. It gets easier from there on. I am holding less than 15 properties for the first time in a very long time but we are getting ready for a big purchase so that is okay.
You can never do enough due dilligence – but that goes for any investment – it can be very worth while but you need to come at it from the right mind set.
The way i see it i was able to keep my oz portfolio intact without using up any equity there. Now many buy holds in NZ and set and paying for themselves after some tweaking and adjustments and the whole machine just chugs along nicely (apart from the odd scary bill or two) On my site there is a quote from dolf de roos who is a property guy that some people have heard off.
I am not big into guru’s and certain ones make me choke but this puts it in perspective in think. That is, regardless of the rise and fall of the market which will happen in the market for anything – fundamentally property investing is easier in New Zealand BUT this does not mean it is easier for an ozzie to make money in NZ from OZ or easier for those that rush in.
The rules of the game may be simply but that does not mean it is easier to win [wink]
cheers
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/cashflowproperties_wanganui.htm
Staff writer Aldo Svaldi can be reached at 303-954-1410 orPerhaps call Aldo on the numbers supplied – I have never met him so I can’t comment on his level of general optimism versus pesimism. It is his article and I am pretty sure the title was a by-line from somewhere in the original.
Sourcing Positive Cashflow Investment Property
http://www.cashflowproperties.co.nz/cashflowproperties_subdivide_profit.htmi will take a guess for you billy – ozzie gov’t wants you to pay tax on your worldwide income – so if you are a resident for tax purposes in oz the ato is interested in all your activities. Where are you are resident for tax purposes? (speak to a good tax lawyer)
Then i continue guessing — so if you do your income tax return in the uk and given all the local rules and deductions available to you the number is still a plus number the ato wants some. Although it has been a very long time since i have seen an on paper plus number for a property tax return given the significant depreciation allowance available in most places.
But i am pretty sure they are not interested in offsetting foreign losses against local income.[blush2]
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
Hi Dom,
That sounds like a great dilemma to have!
What I would suggest is keep everything you have as it sounds like they are all doing well for you. Then, find a house as nice as your ppor or even better in your neighbourhood and rent it. Then rent out your ppor. That way, you have an extra IP, AND you can claim your mortgage repayments, rates, maintenance/repairs etc on your ppor as expenses just like your other IP’s. I’m sure you can find a place that is renting well below what you are paying off your mortgage.
We recently looked in to renting a place in a neighbourhood we used to live in that would cost $700k to buy and only $270p/w to rent!!
I’m not sure how this would effect your servicability (this would depend on how the banks treat it) but you would definately have a higher cash flow coming in.
cheers
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
yes catnapping is highly illegal – or is that something else!
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
Maybe PM Terry and ask him if he will help find you another lender – there will be alot of other factors in play but with a proven history of income you should find a lend. What is the gross/net difference in the income.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
would have to agree – there is not much to it but it is a dreadfull job. as a kid i used to crawl around under houses and do this type of work on occassions.
half a dozen car jacks – lots of bricks and concrete and you will have yourself a straight house – get a pro to do it. But get under and check why it has sunk. Most common is misdirected storm water which is easily fixed but if it is moist for some other reason you will need to address this first. Are the bearers rotten or bowed. Sometimes they will bend which makes straigtening a bit harder. Sometimes the whole house will sink and tilt a bit which is probably the easiest to fix. You will get alot of cracking in plaster etc so budget to get that done.
last time is spoke to someone it was between 150 and 200 per stump to get done (that could be old numbers)good luck
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
there are quite a few homes with asbestos roofs in my area and they do sit on the market for ages. remove the sheets cost about 2.5k and new iron about 6.5k.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
good luck with the new business. be sure to keep us all informed.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
Hi MM,
The guys at lj are fantastic and that is why we recommend hundreds of people there every year without any incentive or reward for doing so may I add.
We get charged the same as everyone else and I imagine receive the same service. We speak with them usually a couple of times a week and they really do out shine any of the others in town – especially since some changes have been effected. I will continue to use and recommend them.
But I had a different type of service in mind that I don’t think will have to much impact on the size of any current roles. In fact you will find that some agencies are dumping properties (usually owned by out of town investors) in order to concentrate on getting quality rentals in their role while others are forced by the parent groups to “accept every application for management”.
The idea is not really mine – it came about because people keep asking us to do it. I probably get three emails a week from people we have never previously heard of who have bought a property and are at the point of a nervous break down because they can’t find management that understands the issues. I recommend them on to people that I think can help because otherwise we end up doing “favours” and use up many hours of our valuable time trying to fix problems for people without any reward.
So as you can see their is alot of scope for a niche business that would fill a gap in the market rather than take any market share.
You will find that in alot of other major centres in nz property management companies are independant to major real estate agencies.
There are alot of funny things that go on in real estate and there is serious opposition to any type of innovation or competition.
I spoke with someone yesterday about advertising rates and he told me a funny story how the local paper charges him $2000 per page to advertise while the established agencies get charged $400 per page. Then there are some papers that won’t even accept the adds. There are other examples but that is probably off topic.
In relation to the newsletter I am pretty sure most people know the source and we never claimed anything was ours. Most of the stuff we post is available electronically so it is a matter of cutting and pasting. We are merely sharing information. Some people actually appreciate it .Others obviously do not.
However, I am very pleased to be the topic of your first ever post and I hope you continue to contribute to the forum.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
Hi Leila,
We have used these services many times in New Zealand and they are worth every penny.
We are in the process of settling up a similar business on the nsw central coast. I will let you know when it is up and running.
cheers
Liz
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
Hi Katherine,
Winter is the killer here (so landlords if you house is empty and does not have a heat pump or good mutilfuel burner it is no surprise – both options are between 1500 and 3000 and money well spent) so it is great to have the flexibility to move around.
We would need to get the right team in place to make the thing work properly.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
yeah – would stick to the methods i am doing now as doing what works works can’t be a bad thing. The real question is more toward what dr x is saying. You have the 500k how can you make that into something life changing rather than a delema.
You could by one large property and pull in 75k or so gross income off it but you also need to look a cap growth.
Perhaps starting something new with new money is not a good idea. I mean that you should feel confident in a certain area before throwing all the eggs in one basket.
Maybe you need to decide how active you want to be in relation to the portfolio. Are you young and starting out or is it the “last car before i die” type of investment you are thinking off.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
gmh454 – now that was a very bad run if I have ever seen one but then again as you said yourself these are purchases based on emotion more than anything else so probably are not investments – just my 2 cents.
I recently thought I needed a new car a took a few for a test drive – then I realised the only thing that need the car was my ego. I’m sticking with the honda. [biggrin]
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
I would suspect 20-30 more points by the end of 2007. If this is the case (this is what I hope for) – we will go hunting for our first IP as prises already falling in Wynnum/Manly Brisbane on both houses and Townhouses. Higher interest will make more bargains to be available.don’t mean to offend simple – i hear alot of this type of stuff where people say they are waiting for a huge macro event and then they will cash in and become rich.
i would suggest that most people don’t do it because by then “everyone” is not investing in property and you will be inundated with information about how bad an idea it is and how much money you will loose.
I posted a thread a while ago to see how many people had actually profited from the last sydney slump (the one we are in now???) and there were not to many responses from people who had picked up fanstic deal from distressed vendors.
On a positive note I hope you do follow your plan and get those bargains when they come up and start building a good portfolio of property.
But – it is a good thing isn’t it.
We all can’t get rich at once so only a very small percentage of people will “see” opportunities and then only a very very small percentage of those that “see” will take action and do something.
You could say that no matter how bad a crash or slump we have there will not be a very significant shift in who holds the wealth. Some small players will go to the wall but that is about it.
Most mum and dad investors only ever buy one or two – if that is all you are going to do then on some level I agree with all the naysayers – don’t bother.
But on another level I feel that for some these same one or two properties could be the difference between living well or scrapping the barrel in our later years.
Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html
